Retailers Launch Their Own Stimulus Packages

Tired of waiting for spending to rebound on its own, retailers are taking matters into their own hands. Stores like Sam’s Club, Target, Toys “R” Us, Staples and Office Depot are offering unconventional promotions meant not only to attract visitors to stores, but also to get them feeling profligate.

Getty Images

Wal-Mart's Sam’s Club is introducing a program in which it facilitates loans for shoppers of up to $25,000, backed by the Small Business Administration.

Target

TGT loading...

Quote  |  Chart  |  News  |  Profile

[TGT  Loading...      ()   ] will give its credit card holders 5 percent discounts. Toys “R” Us is instituting a holiday fund program where it adds to shoppers’ savings, and Staples and Office Depot are giving away office products for a penny or at no cost.

“A lot of the government programs have come to an end,” said David Bassuk, a managing director in the global retail practice at AlixPartners, a financial consultancy. “So retailers are taking it upon themselves to do everything they can to get the consumer to spend, even opening up their own wallets to give money back to the consumer.”

Persistent unemployment nationwide is threatening to inhibit consumer spending. The latest figures from the government on Friday underscored the depth of the problem, with the economy adding only 83,000 private sector jobs.

There was no relief in sight from Washington, either. Congress left on recess Friday having failed to pass legislation that would have extended unemployment benefits for hundreds of thousands of Americans.

On the small-business side, credit concerns are keeping some companies from spending. And on the consumer side, while spending and confidence numbers continue to be weak, personal income has risen for three months straight and savings rates are relatively high. That suggests people now have cash but are just sitting on it.

Against this backdrop of uncertainty, retailers are taking bold steps. Of the over-the-counter stimulus plans, the one at Sam’s Club is the most unusual.

Sam’s began testing the program in May and will soon start marketing S.B.A. loans of $5,000 to $25,000 for its members nationwide. Superior Financial Group, which is managing the loans, gives Sam’s members a $100 discount on the application fee, and lower interest rates, because of how much business it expects through the arrangement.

The company says it does not expect the program to be a big moneymaker, though it earns $50 for each financed loan. The point is to get customers spending more freely — and, it hopes, spending at Sam’s Club.